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04/10/97 BENOY MOTOR SALES v. UNIVERSAL

April 10, 1997

BENOY MOTOR SALES, INC., A CORPORATION, BORG PONTIAC-GMC, INC., A CORPORATION, CONLON-COLLINS FORD, INC., A CORPORATION, FRAHER FORD SALES, A CORPORATION, LYNN CHEVROLET-BUICK, INC., A CORPORATION, NOREM BUICK CO., INC., A CORPORATION, SAWICKI CHEVROLET-CADILLAC, INC., A CORPORATION, S. P. BRADLEY MOTOR COMPANY, A CORPORATION, SUBURBAN BUICK COMPANY, A CORPORATION, AND WOLF CHEVROLET SALES, INC., A CORPORATION, PLAINTIFFS-APPELLANTS,
v.
UNIVERSAL UNDERWRITERS INSURANCE COMPANY, A CORPORATION, DEFENDANT-APPELLEE.



APPEAL FROM THE CIRCUIT COURT OF COOK COUNTY. HONORABLE DOROTHY KINNAIRD, JUDGE PRESIDING.

Rehearing Denied May 12, 1997. Released for Publication June 2, 1997.

Presiding Justice Wolfson delivered the opinion of the court. McNAMARA and Burke, JJ., concur.

The opinion of the court was delivered by: Wolfson

PRESIDING JUSTICE WOLFSON delivered the opinion of the court:

Our national desire to clean up polluted sites has produced a side industry that, in turn, creates a fertile ground for litigation--the resolving of coverage disputes between insured polluters and their insurance companies. This is one of those cases.

The plaintiffs are 10 automobile dealerships (Dealerships). They sought a declaratory judgment that would require Universal Underwriters Insurance Company (Universal) to defend and indemnify them against various claims brought first by the Illinois Environmental Protection Agency (IEPA), then by the United States Environmental Protection Agency (USEPA), concerning the same polluted site. The IEPA filed a lawsuit. The USEPA did not.

The trial court partially granted and partially denied the Dealerships' motion for summary judgment. That denial creates the major issues on appeal.

The trial court found the actions brought against the dealerships were separate and distinct. That meant Universal would not be responsible for any defense costs related to the USEPA administrative claim. It also led the trial court to separate consideration of "source removal" of the pollution from the soil and cleanup of the groundwater. Those decisions and other matters determined by the trial court lead us to reverse and remand this cause to the trial court for further proceedings.

The plaintiffs are 10 automobile dealerships. They are Benoy Motor Sales, Inc. (Benoy); Borg Pontiac-GMC, Inc. (Borg); Conlon-Collins Ford, Inc. (Conlon); Fraher Ford Sales (Fraher); Lynn Chevrolet-Buick, Inc. (Lynn); Norem Buick Co., Inc. (Norem); Sawicki Chevrolet-Cadillac, Inc. (Sawicki); S.P. Bradley Motor Company (S.P. Bradley); Suburban Buick Company (Suburban); and Wolf Chevrolet Sales, Inc. (Wolf). Universal Underwriters Insurance Company is the defendant.

The Dealerships were solicited for their used crank case oil. Other than Lenz Oil, the record does not state who solicited the Dealerships' oil. The Dealerships sold some of this used oil to Lenz Oil.

Sometime between 1977 and 1985, the Dealerships purchased broad coverage insurance policies from Universal. The policies were called "Unicover" policies. The policies were an amalgam of separate policy types, such as general liability, fire, crime, property, and uninsured motorist policies. The policies included one or two types of umbrella coverage protecting the business or an individual.

Universal issued to the dealerships three types of Unicover policies. One policy was used generally between 1975 and 1980 (Unicover), a second between 1980 and 1982 (Unicover II), and a third after 1982 (Unicover III).

In 1985 the IEPA filed suit in Du Page County seeking recovery for any costs incurred because of the alleged release of hazardous substances at the Lenz Oil facility. The IEPA identified the Dealerships as potentially responsible parties (PRPs) but did not name them as parties in the lawsuit. In the fall of 1987, the IEPA sent notices to the Dealerships informing them that they were PRPs. This was the Dealerships' first notice of the problem.

In November 1987, Universal wrote the Dealerships. In its letters, Universal reserved its right "to deny coverage, to commence a declaratory judgment action, or to condition its defense obligation on a later judicial determination of its obligation" in this matter.

On March 24, 1988, the IEPA amended its complaint and named the Dealerships as defendants in the suit. On March 30, 1988, several of the Dealerships, while denying fault, joined a Partial Consent Decree. The Decree provided that the named Dealerships reimburse Illinois for costs expended in immediate removal activity at the Lenz Oil site.

The Decree covered "Source Removal" at the site but did not cover "Groundwater Costs." The Decree defined "Source Removal" as including all costs except "Groundwater Costs." "Groundwater Costs" included all costs associated with a program of groundwater remediation at the site, including costs to develop a groundwater monitoring ...


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